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Madigan pitches plan to expand business tax credit
Question of the Day
SPRINGFIELD, Ill. (AP) - A plan to expand and restructure a state business tax incentive program is advancing in the Illinois Legislature.
A House committee voted 8-2 Wednesday to approve House Speaker Michael Madigan’s plan to expand the EDGE tax credit program to smaller companies that create at least five new jobs, and to reward businesses that create jobs in high-poverty areas.
More than 700 companies across the state claim the EDGE credit, according to the state Department of Commerce and Economic Opportunity. The program provides a credit against corporate income taxes, provided companies make capital investments that create jobs. But many companies can’t use the credit because they don’t pay enough corporate income tax.
Madigan told committee members that as many as two-thirds of the state’s companies don’t pay any corporate income tax.
“That’s what got my attention,” he said.
Under the legislation, a business with fewer than 100 employees would be eligible for the credit if it creates at least five new jobs. It would remove a $1 million capital investment requirement for businesses with less than 100 employees.
The speaker’s staff said a higher percentage credit would be offered to companies creating jobs in an area of high poverty, meaning in a census tract where more than 20 percent of residents live below the poverty level, or in an area of high unemployment, where the jobless rate is more than 3 percentage points above the state’s average. Illinois had the third-highest unemployment rate among U.S. states at 8.4 percent in March, below only Rhode Island and Nevada.
The legislation would require companies to sign a legal document stating they would have conducted business out of state without the tax credit.
A business must agree to disclose income tax information during the term of its EDGE agreement, including gross income, the amount of income allocated to Illinois, and net income. That information would be publicly available on the Department of Commerce and Economic Opportunity’s website.
Some business groups say Madigan’s changes are too narrow.
Doug Whitley, president of the Illinois Chamber of Commerce, told lawmakers the legislation “sends the wrong signal” to those considering doing business in Illinois. He said lawmakers should address the state’s corporate tax incentive policy in a more comprehensive way.
Illinois temporarily raised the corporate tax rate to 7 percent in 2011 and that increase is scheduled to expire in January. Gov. Pat Quinn and majority Democrats, including Madigan, want to make the higher rate permanent.
Madigan said reform of incentives is part of a larger conversation about reforming the tax code.
“Our plan today is to present a plan on EDGE,” Madigan said. “But keep open the discussion and dialogue as (related) to the tax code.”
The measure now heads to the full House.
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